We have today published the May-edition of our Global Monetary Conditions Monitor.

Starting this month, we have added Argentina to the list of countries covered in the Monitor so we now cover monetary policy in 26 countries around the world – including inflation forecasts for all of these countries.

Argentina has historically struggled with a lack of monetary stability. However, with the introduction of an inflation-targeting regime in September 2016, the country has some hope of recovering its balance.

Our indicator for monetary conditions in Argentina, however, shows that Argentina is still very far away from monetary stability.

If it is to get closer to this goal, further steps are needed from the government and the central bank.

A key problem is Argentina’s structurally weak public finances, which means there still is ‘some unpleasant monetarist arithmetic’ that is keeping inflation expectations severely elevated.

To put the matter in another way, so long as the country conducts an unsustainable fiscal policy, investors, consumers and employees will continue to expect monetisation of public debt.

Other key messages in the May-Monitor:

• The Federal Reserve still seem overly eager to tighten monetary conditions – consequently it is likely the Fed will continue undershoot its inflation target.

• Both the PBoC and the ECB remain broadly speaking ‘on track’ despite some recent jitters in the Chinese markets and declining inflation expectations in the euro zone.

• Monetary policy remains too easy in Sweden, the UK and Iceland, and monetary policy is excessively tight in Canada.

You can subscribe to the Global Monetary Conditions Monitor here or contact us by e-mail at support@mamoadvisory.com.